When it comes to removing our dependence on foreign oil there are other options than using electricity or hydrogen to power cars. One of the options is using ethanol and other biofuels to replace some of the petroleum used in our gasoline. The big downside is that most of the ethanol produced in the U.S. today is made from corn.

Corn is an important food crop that is consumed by humans and used as feed for livestock and other animals. Scientific America reports that for every ten ears of corn grown in the U.S. today, only two are consumed by humans as food. The other ears are used for animal feed and ethanol production.

The numbers show that for the year spanning August 2010 to August 2011 the biofuel industry used more corn than farmers used for animal feed and residual demand. This is the first time more corn has been used for ethanol and shows a shifting balance that could spell trouble in the future. Over that year span, farmers used 5 billion bushels of corn and ethanol production used 5.05 billion bushels. Some of that corn did return to the food supply as animal feed and corn oil.

The fear is that the shift from food being the largest use for corn and fuel taking the top spot is a concern that could have significant impact on the world grain market. One of the reasons for the shift to ethanol use for corn is the government subsidies and the import tariffs on foreign ethanol.

Steven Rattner said in a piece written for the NYT, “Because of the subsidy, ethanol became cheaper than gasoline, and so we sent 397 million gallons of ethanol overseas last year. America is simultaneously importing costly foreign oil and subsidizing the export of its equivalent.”

That means much of the corn being used for fuel isn't making it into American fuel tanks so we still have to import more foreign oil to meet our fuel needs. Some in Congress are working hard to get the subsidies repealed and to lift the import tariff so that cheaper biofuels made from sugarcane can be imported from Brazil. There is also a lot of research going into making ethanol from other crops like switchgrass.

Rattner also wrote, "Even farm advocates like former Agriculture Secretary Dan Glickman agree that the [ethanol] situation must be fixed. Reports filtering out of the budget talks currently under way suggest that agriculture subsidies sit prominently on the chopping block. The time is ripe."

Ethanol was a dream come true for big business funded special interest groups. Archer Daniels Midland (ADM) made off like a bandit at the expense of the US taxpayer. Thankfully this gravy train is coming to an end.

While there was a time when farmers were paid not to produce on their land, that hasn't been the case since the 90's. US farmers have been producing at their maximum capacity for years now. (Which is to say, at the maximum level each farmer feels is appropriate if they want to grow organic or whatever, but the big corporate farms have been growing as much as they can.)

To go along with the end of corn for ethanol subsidies, we need to have some sort of guidance that says that farmers need to grow X percent of other-than-corn grain crops for every Y-percent of corn they grow.

A HUGE part of the spike in food prices has not only been the higher cost of corn for animal feed, but the fact that farmers are devoting more acreage to corn production. Less acres of wheat/oats/barley/etc means higher prices on those grains as well.

So not only were we paying for ethanol subsidies with our taxes, but we got a double whammy by paying more for EVERY grain crop....all the while the farmers were laughing all the way to the bank!

That's a lie presented by politicians who want to demagogue for votes. The government doesn't cut any subsidy checks for oil companies. There are no tax dollars flowing from the government to oil companies. If you went through the government's annual budget you would never find a line item in it for subsidies to oil companies (which you would find for ethanol and other things). The so called "subsidies" (which politicians later called "loopholes" when they were called out on it) are tax code deductions allowed for capital expenditures, of which the oil industry has more than most. This deduction is not special to the oil industry, it is a deduction available to any business that files taxes in the US. It's the business equivalent to you being able to itemize a job expense on your own taxes. It's not a matter of "ending subsidies" to them as much as it is wanting to change the tax code so one industry is excluded from something everyone else gets.

quote: But ethanol isn't the biggest contibutor to prices these days. It's the growing middle class in China and India. These guys want meat. And it takes about ten pounds of grain to get a pound of meat.

Interesting considering the majority of Indians are vegetarian and most of those who do eat meat do it rarely.

quote: To go along with the end of corn for ethanol subsidies, we need to have some sort of guidance that says that farmers need to grow X percent of other-than-corn grain crops for every Y-percent of corn they grow.

A HUGE part of the spike in food prices has not only been the higher cost of corn for animal feed, but the fact that farmers are devoting more acreage to corn production. Less acres of wheat/oats/barley/etc means higher prices on those grains as well.

No need for such regulation. If you get rid of the incentives, the farmers will grow crops that will net them the best profit. If the prices for the non-corn grains are higher then they will grow them until the demand has been met by supply and the prices come down. Eventually it will end in an equilibrium with smaller fluctuations of supply/demand. The answer to one form of government intrusion int he market isn't to add another intrusion in it's place.